Heard on the Street: What J.P. Morgan’s Numbers Mean

J.P. Morgan reported its first loss amid more than $9 billion in legal costs. Heard on the Street’s David Reilly joins MoneyBeat. Photo: AP.

This transcript has been automatically generated and may not be 100% accurate.

... I ... ay ay ay ay ay mm mm mm ... welcome to MoneyBeat I'm Steve Russolillo ... the nation's biggest bank by assets posted its first loss since Jamie Dell Diamond joined J P Morgan in two thousand for ... J P Morgan reported a loss of three hundred and eighty million dollars in the third quarter ... as balls over nine billion dollars in legal costs alone ... joining us now is heard on the Street editor David Reilly ... David morning ... so they take later from from the results this morning big takeaway in big numbers and not a huge loss in the scheme of things but any loss is a big loss to JPMorgan ... let's let's put the numbers cited saving the nine billion for legal expenses is useful when that really shows ... is how much ... how ... big the storm around JP Morgan is right now he got investigations on multiple fronts ... there are in negotiations to try and settle ... of with the regulator is video charges related to mortgages that were sold back by Bear Stearns a walk in you to which they took over in whisper numbers a settlement to be in the eleven billion dollar range ... so there's this huge storm swirling around them ... in now we see how much this actually call us right so you mention nine billion is a big number but there was another big numbers there is a twenty three Billy ... Wright on ... a case in this gets a look of it been ... so abetting creates reserve sort of like to think like a cookie jar for things that are to be coming down the line in each quarter and put some money and ... so they put nine billion dollars into this Joe are ... who we never knew before was how big the jar was his banks in other countries not JPMorgan ... don't like to tell you how much they're putting aside for legal settlements ... J P Morgan for the first time ever this morning said here's what that jar is here's the biggie is twenty three billion dollars ... which is more to the north but it's it's significance the first time it also said that he and I think are the reason they did this was because ... knowing billion such a big number analysts investors in the levy saying woe ... is ongoing in an option than fifteen billion should than eighteen billion finicky don't know what the size of the jar is ... he can really determine that so I think that's why they put that number out there and with all seem to be about the numbers and other banks have not released their own so if you have to say this right this is a cookie jar as a pejorative sense then on to egg Omi that weights or so we try to picture what that is exactly ... so ... I guess big picture here for JPMorgan if you're an investor right now looking at J P Morgan shares the stock is above fifty dollars right now it's been up ... about twenty percent this year so it's still pretty good run ... even amid all the way it's been it's ... not as much today as it was pre market but still up ... and I think part of it is what investors want to know is that it's the market was certainly the one to be able to quantify it ... going into this CEO in September last we heard was that the legal hit might be more than one point five billion ... this is the orders of magnitude higher but at least able to sit down say ... ok I don't expect this is going to happen each quarter from here ... now I can build one model here's what I see ... the look the underlying business of the bank was pretty good at the Inn look aside from that big that it's tough to do that ... they had a pretty good and decent quarter given the very top of our great God that was my next question so do you break that I know it's tough to sort of take away the legal uncertainty here but ... if you do strip that out there like business as you said is pretty good so what what about the underlying business is really doing well for a ... while I thing level with still some things that war and you know them the mortgage business mortgage originations fell off quite sharply ... umm into mortgage production revenue fell off but that was to be expected to renew this to happen we saw mortgage rates go from yelled of around three nap percent on thirty year fixed rate mortgage the spring ... to their about four point three point four percent now so when any time to get pics when mortgage rates that that people are Kinniry by ... people knew that ... but they're they're capital markets are the business ... in ... some areas like in the equity capital markets for that couple more sport those perform quite well on their fixed income trading business it was down but I think not as much as some people were fearing ... on so that you know sort of it wasn't bad it wasn't blow out the lights by any means was in bed the other ports of the business did pretty well one thing that really surprising when you look at the charge off rate or what they have the right offer credit cards ... that is at a historical low the euro Autoweek though is the historic while ... so what's it say about that as it shows you know consumers are either have either ... grown more conservative ... or maybe a bar in Yeltsin of the sun the consumers are getting their household finances in better shape ... that that that the unit that feeds her and so will you weren't seeing ... belong growth is still pretty tepid ... um but the other parts the business or doing okay ... and a big thing to is that rising interest rates ... helped to stabilize the amount of money the making the difference when within our depositors and what they want other people ... and